ECON 219 Lecture Notes - Perfect Competition, Market Power, Allocative Efficiency

• School: McGill University
• Department: Economics
• Course: ECON 219
• Professor: Christopher Ragan

Document Summary

> free markets coordinate actions automatically: price signals, no. > the pursuit of profits leads to innovation and growth. > free markets decentralize economic power: which mix of government intervention and markets best suits everyone, monopoly of violence. * free markets are based on the concept of allocative efficiency: the informal case is based off three observations: Allocative efficiency --> market efficiency :: we have allocated resources efficiently in a way that maximizes our use of resources. need to collect data. Rivalrous : if one person"s consumption means that on one else can consume it. Excludable: if people can be prevented from using/consuming it. [notes erased at this point] healthcare is a snickers bar. Preferences for public provision some things -- like justice and police services -- are viewed by most people as being better provided by government than by the private sector. Protecting individuals from others individual freedom generally does not include having the freedom to harm others.